The Changing Face of Portals

Black portals fight for the growing African American Web population by Brian Orsak For a few moments last year, affinity portals were all the rage. Media pundits prognosticated that the Internet's next boon would be vertical portals aimed at audi-ences who, impelled by commonalities, would converge online in great marketable masses. At the time, the idea seemed valid enough; the Web was growing at a phenomenal rate and portal offerings such as free e-mail, homepages, and searches were easy to duplicate. Entrepreneurs questioned why users would turn to faceless sites such as Yahoo or Lycos when they could find the same services targeted toward their particular affinity groupwhether gender, race, or sexual preference. It seemed given that vertical-specific portals could easily scoop up users disenfranchised by AOL and Yahoo. Of course, the question few asked was, what value proposition would a vertical portal provide that AOL and Yahoo did not? Are communities cre-ated under the penumbras race, gender, or sexuality translatable to the Web, where users often flock in anonymity? Global Mecca CEO Rod Robinson is betting his business that they are. "I think it's just like a neighborhood," he says. "I live in a neighborhood and my neighborhood is predominantly white, but when I saw that I had some black neighbors I went to go meet them. I think the lnternet's just a place to go where there are people like you. Web commu-nities are no different than communities we live in." Yet, as Yahoo, AOL, and MSN continued to grow, the market paid less attention to the smaller players. The women's portals were given Wall Street's seal of approval only to later undergo the pain of market saturation. Many analysts that were once proponents of the vast and variant portal mar-ket washed their hands of small portals, viewing such sites as overdeveloped and incapable of sus-taining more than a handful of names. Of the proliferating nonwhite ethnic groups whose online fate is still uncertain, the most rapidly growing is the American black community. Forrester Research Analyst Ekaterina Walsh says the number of African American households online is expected to increase by more than 21 percent this year to 4.9 million. Previously, blacks were a nearly invisible presence on the Web. EMarketer reports that in 1999, black Americans comprised 12.8 per-cent of the total U.S. population but only 7 percenl of the total U.S. Internet population. Similarly blacks lagged behind Caucasians, Asians, and Hispanics in percentage of Internet penetration, with only 20 percent of blacks online as compared with 39 percent of Asians and 32 percent of whites. Causes for the disparity are myriad and com-plex. In its 1999 study, the Department of Commerce reported that 22 percent of black house-holds that weren't online cited expenses as the cause. Just beating that number, 24 percent of offline black households said they didn't have Net access because they didn't want it. "It's so ridiculous [to say] that black people aren't online," says Net Noir CEO David Ellington. "When we adopt a technology, we have consistently proven that we will take it over. It's not about PC ownership. I don't care if you own a PC. I just care if you access it through work or school. It's trickle down." Still, investors didn't glom onto the new tech-savvy demographic immediately. But when data similar to Walsh's was released, heralding the rapid rise of Internet adoption rates by African Americans, many investors took action. They began to focus on a demographic previously considered "underserved" and digitally divided by whatever measure-whether economic, ethnic, or cultural. This newfound market focus, bolstered by the potential to capture a 35 million-plus African American population, created a quandary for many of the current portal plays. Traffic numbers and VC backing that have validated the space also spurred initiatives from old-media brands with money to back online marketing, including, among others, BET.com and Time Warner. The result, some say, is that the terrain of African American websites will undergo massive change within the next year. "I think it's going to tier dramatically," says BET.com COO Scott Mills. "The African American space can only hold a finite number of companies. There will probably be three viable companies [and] the tiering between No. 1 and No. 2 will be huge." That prediction held true in the case of the black portal's closest example: the women's portals. When investors first entered the space, it was popu-lated by numerous sites, from iVillage to Cybergrrls. Today, ivillage and Women.com are the clear win-ners in terms of branding and investment; they tar-get the most median population of women to main-tam that place. In the race for African American dollars, how-ever, sites have to identify themselves by addressing sensitive questions, and define themselves without alienating certain factions. While some sites such as Net Noir, BET, and BlackPlanet aim to service all blacks, others opt for a more focused approach. Hip-hop pundit Russell Simmons, who has made a name as one of the leading black entrepre-neurs with his record label Def Jam Recordings and his Phat Farm clothing line, sees the issues facing black portals on a fundamental level "The differ-ence between redheaded models and women is pretty clear," he says with his trademark bluntness. "So what the fuck is black? I see a black man. He looks different than me. He talks different than me." While Simmons believes there are common interests among ethnic blacks in America, he sees youth culture, and especially hip-hop, as global. Even though urban culture is often discriminatorily categorized as black, approximately 80 percent of Simmons' business is generated from those outside of that community, making the urban-portal space more about lifestyle than ethnic background. Entering the Space Mills wants BET.com to stay firmly rooted as the black-not urban-portal. The company, which received a resounding confirmation last summer when it raised $35 million from Microsoft, Liberty Media, News Corp., and USA Networks (almost with a single a phone call, boasts Mills), moved quickly into a space previously dominated by pri-vately held community sites. The result of the coni-pany's financing has been the relaunch of its site- formerly a joint venture with Microsoft called MSBET-and top traffic numbers among black sites in its first month of operation, with 386,114 unique visitors for February, according to NetRatings. That's equivalent to reaching 1 percent of the entire African American community, assum-ing that nearly all of the site's audience is black. Not to miss out on a lucrative market, Time Warner and its subsidiary, HBO, announced plans to launch an urban and black-oriented site, Volume.com by June. Yet, as of press time, the site has not launched. "We're curious about the Time Warner offer-ing," Mills says. "We think the people who are already in the space have the benefit of having been [there] for a substantial amount of time, but it's going to be much more competitive. In the next 18 months, there's going to be a shakeout and it's going to be very interesting to see who survives the heat." Slicing Up a Small Pie The shakeout, if it comes, could involve any of the dozen or so privately funded portals now in the space. Most-such as BlackPlanet.com, BlackFamilies.com, Afronet, Net Noir, BlackVoices.com, and BlackWorld.com-target the black community as a whole, with online channels ranging in topic from black-related health issues to music to black-related news. Others divide the black community along different lines-by intellectual interests (Africana.com), or business ambitions (GlobalMecca.com), or by peripheral interests often associated with the black community, such as the urban plays. But no matter the focus, they all stand to lose traffic to the emerging large-scale, corporate portals. Ellington, who calls himself the "granddaddy" of the black portal space, is less concerned about Volume.com. The first big investor in Ellington's site was Time Warner's husband-to-be, AOL. "I think the issue for Volume is that they've never sold a thing in their lives and they're about to wake up to a whole new world," Ellington says. "Just because you build it, doesn't mean they'll come." After five years of building Net Noir's brand, San Francisco-based Ellington is one of the few entrepreneurs in this space with the clout to prog-nosticate on its future. And he isn't enthusiastic about his competitors. Within the next year, Ellington predicts the market will see "a lot [of] companies drop off because you aren't going to see people writing checks for lesser-known brands." Thus far, Net Noir's brand building has been the mirror opposite of BET.com's. Founded five years ago, Net Noir produces a black community portal in addition to building websites and selling market research. The company was one of the first in America Online's Greenhouse Program-an investment fund that put early money toward com-panies such as Motley Fool and iVillage. Since then, Net Noir has relied primarily on secondary revenue streams, general advertising, and community con-tent to build up its steady consumer base, which the company estimates at 600,000 unique monthly vis-itors. By Ellington's account, media attention over BET.com's enormous funding round last summer sparked strong but recently diminished interest from VCs in the black portal space. "Last year, it was the hottest thing to be a black dot-com. It was the last vertical space [after women and Latinos]," Ellington says. "I think this space is hot, and it's not bullshit." Charles Crockett, a partner in black-run, minority-focused and early-stage technology VC firm Ascend Venture Group, says, "What is occur-ring is a rededication of capital to this space. Sites like BlackFamilies and Net Noir have been around for quite awhile. What we're seeing now is a further penetration in this space of people with resources?' Crockett, who represents one of the few ven-ture-capital firms focusing its investments on minority-run companies, sees BET.com as evidence that veteran entertainment and media players are now viewing the space as a sure cash cow. "I think [BET.com] helps to validate the space for others. A lot of people may not have taken this space as seri-ously," he says. Yet Crockett's enthusiasm for the affinity-por-tal model is late coming, by some votes. Forrester Research's Walsh, for one, sees BET.com not as a sign of the beginning but of the end. "The time of portals is gone;' she says. "It's already happening with women's portals. All portals in general are going to die very soon, within three years. The only order that will remain will be MSN, Yahoo, and AOL, and that space has already been divided?" BET alone will corner the black portal market, and then only because it is an old media spinoff, she adds. "BET will succeed because of its legacy, but it's a unique example." Racing for Black Branding Should a shakeout come, Omar Wasow and the New York-based community portal he directs, BlackPlanet.com, will be among the brands strug-gling to retain its market share. Until last February, when the company fell behind BET.com, BlackPlanet.com was the most-trafficked black por-tal and one of only two black websites to meet NetRating's minimal requirement for traffic moni-toring, which is 124,606 unique visitors per month. Yet, according to Media Metrix rankings for April, BlackPlanet fell shy of beating BET.com's monthly unique visitor count of 246,000 by only 2,000 visi-tors. Reach numbers for both companies during the month were tied at .3, indicat-ing that despite predictions, the race may be closer than expected.While Wasow defends his company against BET.com by saying, "Historically, really new [Internet] brands have beaten old brands," he admits VC attention in the market is upping the ante. "I think it's a saturated market because there are a half dozen capitalized black sites," Wasow says. "[In the future,] you'll have one dominant player and two or three followers." If anything, lesser-funded websites are bankingon community, or "the sweet spot, as Wasow describes it. Community has been one of the main incentives for the black community to get wired, he says. Sites offering chats, message boards, and e-mail for the black community have evinced a strong offline community going online. Conversely, some would argue, community portals have impeded growth in the black space, offering blacks little more than what they could find in an AOL community without strong or relevant editorial content. The handful of companies that reject broad, inclusive platforms for black-centric, interest-focused portals often wave such criticisms. But the specialized, cross-platform approach these sites embrace has yet to show signs of long-term viability against larger portals. Global Mecca's Robinson believes his vertical-horizontal approach-which covers all bases- means looking at the black market for what it is today. Robinson, whose background is within the upper-class entrepreneurial milieu and whose online content runs along similar lines, says his site is both a black portal and a site for middle-class entrepreneurs of any race. He argues that it's appeal-ing to a particular stratum within the black com-munity and the fringe websurfers interested in mak-ing business alliances. "I think there's going to be room for a number of sites," he says."l frankly think that BET.com does-n't appeal to blacks like me. A majority of their thing appeals to young people. There will definitely be room for four or five portals, maybe more than that, but I really think that the ิone-size-fits-all' mentali-ty is just not going to work. In reality, not many black people watch BET." Robinson's critique is one of credibility within the black community-and an issue that Mills admits exists. Though BET has built a de facto brand as one of the only television stations to pro-vide strong black content, its overall appeal to the African American community is debatable, particu-larly among the urban and intellectual crowds whose interests extend beyond BET's middle-ground spectrum. In essence, the space centers around content, of which there has been "a real paucity" on black sites, Mills says. "I think true black portals have, until recently, been an underdeveloped space. What a lot of African American sites have done very well is the community component. What they've underdeveloped is the content." Developed and underdeveloped content, how-ever, are likely to have different meanings in the diverse community--some will opt for the Yahoo-style content while others choose more niche sites. The question of content must be battled out in the space. Will it look like iVillage or will niche sites be successful in the arena? American culture, in all its integrated forms, has always lacked definitive boundaries. The recent success of white rapper Eminem among the black hip-hop community and the adulation of non-black suburban kids of Wu--tang Clan, Latrell Sprewell, or Foxy Brown are road signs that the future may, in fact, not be divided along racial lines.